Necessary but elusive tool for ports infrastructure growth

Eleven years post-concession, the Federal Government has remained the weak link in the drive to reposition the seaports, often dithering with germane policies while reneging on providing the enabling infrastructure. 

All the speakers at the Tai­wo Afolabi Maritime Con­ference in Lagos last week were convinced that the ports concession of 2006 has yielded tremendous economic benefits to the Federal Government and the country at large through the up­grade of the terminals by the pri­vate investors. 

This, consequently, has brought about improved ser­vices and revenue generation.

Yet, they also regretted that much more gains are being frit­tered due to the dearth of such ports infrastructure that govern­ment has obligation to provide.

With the capacity and ability to generate huge indigenous ton­nage, alongside its vast natural maritime endowment compris­ing a coastline of over 800kms and an exclusive economic zone of over 200 nautical miles, Nige­ria is naturally predisposed as the West African ports hub.

Other supporting indices in­cluded a unique location on the coast of the Gulf of Guinea and Bight of Benin, and a vast inland waterways resource of about 3,000kms - with over 50 rivers that can support a vibrant intra-regional trade.

These, however, have remained mere potentials while small neigh­bouring nations have taken the lead through germane policies, commitment and right invest­ments.

For the Group Executive Vice Chairman, SIFAX Group, Dr. Tai­wo Afolabi, “one of the major fac­tors that have impeded the sec­tor from fulfilling its potentials is huge infrastructural deficit.

“Deplorable access roads, faulty cargo scanners, non-existent rail system and non-functional truck bay, among others, have conspired to negatively impact the service delivery efficiency and overall im­pact. 

Infrastructural deficit would negate the good intentions of the government if this problem is not strategically and urgently ad­dressed.”

Specifically, the Executive Di­rector, SIFAX Haulage & Logistics Limited, Maj. Henry Ajetunmo­bi (rtd), listed port infrastructure to include ports terminals, cargo handling equipment; channels and harbours; warehouses, ports access roads, inter-modal trans­port - rail and roads interfacing with ships and badges; utilities like electricity, water, Informa­tion Communication Technolo­gy, deep seaports and scanners, among others.

According to him, the solution is “increased and sustained invest­ments,” and “introduction of pro­gressive and innovative changes in the way we do business.” 

And following the success of the con­cession exercise, Ajetunmobi be­lieves that the way out is public-private partnership (PPP) in projects or services that are tra­ditionally handled by govern­ment.

Among the many, inter-modal transport system is key, the lack of which “remains a major chal­lenge to port efficiency, and may in fact actually be the Nigerian seaport terminal operator’s worst nightmare,” he noted.

“Efficiency in port operations is best achieved when the three modes of transportation – sea, rail and road – are seamlessly brought together in a sustainable manner. 

Speed and efficiency of operations manifest in short ves­sel turnaround time, which itself is largely determined by how fast import cargo is discharged from the vessel and export cargo load­ed alongside.

Similarly, the Managing Di­rector of the Nigerian Ports Au­thority (NPA), Ms. Hadiza Bala Usman, noted that critical in­frastructure for Nigerian ports today go beyond “facilities for berthing ships and cargo han­dling in terminals.

“Currently, it is essentially the provision of hinterland in­frastructure to facilitate the re­ceipt and evacuation of cargoes that pass through the ports, such as inter-modal connectivity to enable rail link to the ports, pur­pose-design highways and facil­ities for truck haulage services, and inland waterways network and connectivity to the seaports.”

The near or total absence of these has been blamed on un­derfunding.

According to her, though port services are demand driven, and early investment in infrastruc­ture imperative so as not to hold back economic development, “port infrastructure is capital in­tensive, with long-term payback periods. 

It is a burden the gov­ernment cannot easily carry due to the competing demands for scarce funds.”

However, these deficits can be addressed through a focused and sustained encouragement of po­tential private sector investors, both domestic and foreign, to see them as remarkably attractive in­vestment choice.

For Ajetunmobi, efforts to develop the port industry will achieve greater effects if strategic alliances and partnerships are grown not just between private and public entities but also be­tween business enterprises or bet­ter still, among a group of them, to pool scarce resources.

“Promotion of strategic alli­ances and partnerships among principal stakeholders will im­prove the port industry, making it a more dominant contributor to the growth of the national econo­my,” he explained. 

“Overall, con­solidation on the gains of the con­cession can come only through greater investments in port in­frastructure, anchored on stron­ger public-private enterprise in­volvement.”

Endorsing this conviction, Us­man said that “now, more than ever, the greater involvement of the private sector in the operation and financing of port facilities, es­pecially through Foreign Direct Investment (FDI), is critical.

“To be at par with enviable maritime nations of the world, our ports need extensive infra­structure overhaul, but as we are confronted with the stark reali­ty of paucity of funds to deliv­er on our mandate, the only way is through PPP ventures. We are set to bring about the much de­sired changes.”

The snag, however, is the ab­sence of consistent and enabling policies, with the few such bills lying endlessly at the National Assembly.

While the Executive Vice Chairman, ENL Consortium, Princess Vicky Haastrup, noted that the high-level efficiency syn­onymous with the private sector would improve facilities and ser­vice delivery if engaged, Senior Partner, ACAS-Law, Mrs. Fun­ke Agbor, stressed the need to strengthen legislation in view of the new role the private sector is expected to play.

On its part, consultancy ser­vices provider, Deloitte West Af­rica, says that its intervention in seven ongoing investment trans­actions in Nigeria shows inves­tors’ concern about inconsistent polices.

The Head of Strategy, Deloitte West Africa, Mr. Bola Ashiru, while commending the 30-year National Integrated Infrastruc­ture Master Plan (NIIMP), pub­lished in 2014, stressed the need for government to involve the maritime sector in its develop­ment “because it is not just about building shipping infrastruc­tures but also rail, road, security and several others.”

On investors’ plight, Ashiru said that “inconsistency in gov­ernment policies” top the com­mon issues raised by the seven investment transactions present­ly ongoing in different sub-sec­tors of the economy.

According to him, they want a guarantee against such poli­cy inconsistencies that will put their capital at risk, and though PPP is always a business case sit­uation, investors onshore or off­shore need to ensure that their money would be protected.

Though he described PPP ar­rangements in the maritime sec­tor as strong, he added that the investors’ perspective needs to be improved on, including “protec­tion of investments through con­sistent government policies and foreign exchange issues.

“Another thing we found out is that investors want to know under what circumstance they can ad­just their rates - whether on the United States’ Consumer Price In­dex (CPI), denominated in dol­lar, or on operators’ naira-based expenses”.

He advised that FX adjustment matrix should be based on the re­alities in Nigeria rather than fol­low the CPI movement of the US$.